Did Samsung Just Kill its Plan to Open a Kenyan Electronics Assembly Plant?

The market for consumer electronics, including that of mobile devices and a myriad of household systems is going to see stiff competition and growth if reports and by South Korea’s tech giant, Samsung will hold. The electronics manufacturer has a plan in its pipeline to increase its local and by extension, African market share in the next half a decade. This development was reported by Reuters, where Samsung said it intends to double the annual revenue contribution from its African market to 20 percent.

Speaking in Nairobi on Monday, Samsung Electronics Africa President Mr. Sung Yoon highlighted that over half of its consumer electronics such as mobile devices and televisions sold in continental Africa are its own. This is a good trend for the company that stills enjoys a respectable brand name across the globe.

Part of this milestone has been attributed to increased demand for larger TV screens and phablet-category smart handhelds. The appreciation of these devices is tied to the ever-increasing connectivity solutions across the continent where carriers and service providers have invested heavily in critical infrastructure that calls for heightened demand for electronics.

Another point that came up during Yoon’s speech is the plan to put up a Kenyan assembly plant. This, he said, would only be possible if the government revised its tax mechanism to favour its feasibility, as well as formulating policies to counter the importation and sale of counterfeit products.

In Samsung’s defence, Kenya’s ICT regulator the Communications Authority (CA) war against counterfeit devices is sporadic at best. It appears that the institution, as well as other governing bodies has failed or is reluctant to implementing regulations to deal with this menace in one strike. In some cases, the CA raids a handful retailers, confiscate fake property and sit back without any form of enforcement. Our guess is that this is the concern that Samsung wants to be addressed in the first place.

Sadly, a tweet sent by the KenyanWallStreet states that local authorities have failed to find a middle ground with Samsung’s demands, which has forced the electronics giant to pull out from its initial plan. It should be noted that these are unconfirmed reports as an official word regarding the matter is yet to go live.

Samsung Electronics Ditches plans to establish an assembly plant in Kenya citing failure by Govt to put in place mechanisms that would protect local manufacturers from cheap electronic imports (The Standard) pic.twitter.com/LJGVpb6Krd

Still on the tweet, Samsung apparently wants to be protected from ‘cheap’ Chinese imports, which, frankly is as absurd as it sounds. Several genuine Chinese firms with quality products have established local offices and ousted Samsung out of key markets such as the mobile segments that is primarily ruled by Tecno and Infinix. Notably, these are brands that have navigated multiple setbacks to establish their brands, and Samsung should have done the same thing (by checking its ambitiously ridiculous prices and reduced marketing) as the competition offers better deals than what it brings to the table.

Admittedly, a local manufacturing/assembly plant is a welcome idea from an economic perspective. Also, several hurdles must be overcome guarantee its existence. We just hope that the company drops its anticompetitive tact that clearly targets the demise of established brands.